Insurance Commissioner Jose Montemayor issued interim guidelines on January 18 that address licensing of financial institutions as insurance agents. The guidelines pave the way for implementation of the Gramm-Leach-Bliley Bill, which allows banks, savings associations and other financial entities to sell insurance beginning March 12 of this year.
The interim guidelines will amend the Texas Insurance Code, which is in conflict with the new federal laws, until the Texas Legislature can address the issue when it convenes in 2001.
“The Texas Insurance Code as it currently exists does not contemplate that depository institutions may engage in the business of insurance to the extent provided in the new federal law,” Montemayor said.
The guidelines, spelled out in a bulletin and available at http://www.tdi.state.tx.us, redefine “bank” to include savings associations, financial subsidiaries, non-resident state banks, and depositories for the purposes of having an insurance license. It also dispenses with the place of 5,000 restriction, allowing banks to obtain a license without regard to the geographical location of its business operations in the state.
MGA licensing will be affected, as well. MGA license applicants can now be financial institutions and they no longer have to be Texas residents.
Also, if a financial holding company owns an insurance agency, either in whole or in part, it will not be required to have all of its shareholders individually licensed.
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